<PAGE>

                             AMERICAN INCOME FUND I












                            AMERICAN INCOME FUND I-D,

                       a Massachusetts Limited Partnership

                Annual Report to the Partners, December 31, 1997
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

                     INDEX TO ANNUAL REPORT TO THE PARTNERS

                                                                   Page
                                                                   ----

SELECTED FINANCIAL DATA                                              2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                 3-8

FINANCIAL STATEMENTS:

Report of Independent Auditors                                       9

Statement of Financial Position
at December 31, 1997 and 1996                                       10

Statement of Operations
for the years ended December 31, 1997, 1996 and 1995                11

Statement of Changes in Partners' Capital
for the years ended December 31, 1997, 1996 and 1995                12

Statement of Cash Flows
for the years ended December 31, 1997, 1996 and 1995                13

Notes to the Financial Statements                                14-24

ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed                             25

Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings                             26

Schedule of Costs Reimbursed to the General
Partner and its Affiliates as Required by
Section 9.4 of the Amended and Restated
Agreement and Certificate of Limited Partnership                    27


                                     - 1 -
<PAGE>

                             SELECTED FINANCIAL DATA

      The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.

      For each of the five years in the period ended December 31, 1997:

<TABLE>
<CAPTION>
    Summary of
    Operations              1997           1996           1995           1994            1993
------------------      ------------   ------------   ------------    ------------    ------------

<S>                     <C>            <C>            <C>             <C>             <C>
Lease revenue           $  4,364,091   $  4,939,781   $  5,241,427    $  6,614,391    $  6,215,910

Net income (loss)       $  1,143,233   $    820,414   $   (750,100)   $   (367,325)   $    234,801

Per Unit:
   Net income (loss)    $       1.31   $       0.94   $      (0.86)   $      (0.42)   $       0.27

   Cash distributions   $       0.94   $       1.00   $       1.25    $       2.56    $       3.00

   Financial Position
   ------------------

Total assets            $ 14,869,863   $ 17,364,360   $ 14,975,028    $ 17,974,840    $ 24,607,500

Total long-term
obligations             $  5,334,349   $  7,780,603   $  5,303,736    $  6,225,806    $ 10,084,361

Partners' capital       $  9,191,217   $  9,090,975   $  9,143,742    $ 10,985,318    $ 13,590,169
</TABLE>


                                     - 2 -
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

             Year ended December 31, 1997 compared to the year ended
             December 31, 1996 and the year ended December 31, 1996
                  compared to the year ended December 31, 1995

      Certain statements in this annual report of American Income Fund I-D, a
Massachusetts Limited Partnership (the "Partnership") that are not historical
fact constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
outcome of the Class Action Lawsuit described in Note 8 to the accompanying
financial statements, and the ability of Equis Financial Group Limited
Partnership (formerly American Finance Group), a Massachusetts limited
partnership ("EFG"), to collect all rents due under the attendant lease
agreements and successfully remarket the Partnership's equipment upon the
expiration of such leases.

      The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. EFG's computer
programs were designed and written using four digits to define the applicable
year. As a result, EFG does not anticipate system failure or miscalculations
causing disruptions of operations. Based on recent assessments, EFG determined
that minimal modification of software is required so that its network operating
system will function properly with respect to dates in the year 2000 and
thereafter. EFG believes that with these modifications to the existing operating
system, the Year 2000 Issue will not pose significant operational problems for
its computer systems. EFG will utilize internal resources to upgrade software
for Year 2000 modifications and anticipates completing the Year 2000 project by
December 31, 1998, which is prior to any anticipated impact on its operating
system. The total cost of the Year 2000 project is expected to be insignificant
and have no effect on the results of operations of the Partnership.

OVERVIEW

      The Partnership was organized in 1991 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment subject
to lease agreements with third parties. The value of the Partnership's equipment
portfolio decreases over time due to depreciation resulting from age and usage
of the equipment, as well as technological changes and other market factors. In
addition, the Partnership does not replace equipment as it is sold; therefore,
its aggregate investment value in equipment declines from asset disposals
occurring in the normal course. The Partnership's stated investment objectives
and policies contemplated that the Partnership would wind-up its operations
within approximately seven years of its inception. Presently, the Partnership is
a Nominal Defendant in a Class Action Lawsuit. The outcome of the Class Action
Lawsuit could alter the nature of the Partnership's organization and its future
business operations. See Note 8 to the accompanying financial statements.

RESULTS OF OPERATIONS

      For the year ended December 31, 1997, the Partnership recognized lease
revenue of $4,364,091 compared to $4,939,781 and $5,241,427 for the years ended
December 31, 1996 and 1995, respectively. The decrease in lease revenue from
1995 to 1997 reflects the effects of primary lease term expirations and the sale
of equipment. Partially offsetting the decrease from 1996 to 1997 was the
receipt in 1997 of prepaid contractual rental obligations of $782,917 associated
with the exchange of the Partnership's interest in a vessel (see discussion
below) and an aircraft exchange which concluded in March 1996. As a result of
the aircraft exchange, the Partnership replaced its ownership interest in a
Boeing 747-SP aircraft (the "United Aircraft"), having aggregate quarterly lease
revenues of $257,420, with interests in six other aircraft (three Boeing 737
aircraft leased by Southwest Airlines, Inc., two McDonnell Douglas MD-82
aircraft leased by Finnair OY and one McDonnell Douglas MD-87 aircraft leased by
Reno Air, Inc.), having aggregate quarterly lease revenues of $395,394. The
Southwest Aircraft were exchanged into the Partnership in 1995 while the Finnair
Aircraft and the Reno Aircraft were exchanged into the Partnership on March 25
and March 26, 1996, respectively (see further discussion


                                     - 3 -
<PAGE>

below). Accordingly, 1997 was the first year the Partnership recognized a full
years revenue related to its interest in all six of these aircraft.

      The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest. In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by EFG. Proportionate equipment ownership enables the Partnership to
further diversify its equipment portfolio by participating in the ownership of
selected assets, thereby reducing the general levels of risk which could result
from a concentration in any single equipment type, industry or lessee. The
Partnership and each affiliate individually report, in proportion to their
respective ownership interests, their respective shares of assets, liabilities,
revenues, and expenses associated with the equipment.

      Interest income for the year ended December 31, 1997 was $134,242 compared
to $127,420 and $53,447 for the years ended December 31, 1996 and 1995,
respectively. Interest income is typically generated from temporary investment
of rental receipts and equipment sale proceeds in short-term instruments.
Interest income in 1997 included $17,719 earned on a note receivable from Semele
Group, Inc. (formerly Banyan Strategic Land Fund II) ("Semele") (see Note 4 to
the financial statements herein). In 1996, the Partnership earned interest
income of $54,300 on cash held in a special-purpose escrow account in connection
with the aircraft exchange transactions. During 1996 and 1995, the Partnership
also earned interest income of $18,511 and $25,788, respectively, on a note
receivable from EFG resulting from a settlement with ICCU Containers S.p.A. (see
Note 5 to the financial statements herein). The amount of future interest income
is expected to fluctuate in relation to prevailing interest rates, the
collection of lease revenue, and the proceeds from equipment sales.

      During the year ended December 31, 1997, the Partnership sold equipment
having a net book value of $306,741 to existing lessees and third parties. These
sales resulted in a net gain, for financial statement purposes, of $512,239
compared to a net gain of $459,596 in 1996 on equipment having a net book value
of $278,348 and a net loss in 1995 of $88,734 on equipment having a net book
value of $342,207.

      In 1997, the Partnership exchanged its interest in a vessel with an
original cost and net book value of $5,091,464 and $2,307,445, respectively. In
connection with this exchange, the Partnership realized proceeds of $1,568,119,
which resulted in a net loss, for financial statement purposes, of $739,326. In
addition, as this vessel was disposed of prior to the expiration of the related
lease term, the Partnership received a prepayment of the remaining contracted
rent due under the vessel's lease agreement, as described above.

      On April 30, 1997, the vessel partnerships, in which the Partnership and
certain affiliated investment programs are limited partners and through which
the Partnership and the affiliated investment programs shared economic interests
in three cargo vessels (the "Vessels") leased by Gearbulk Shipowning Ltd
(formerly Kristian Gerhard Jebsen Skipsrederi A/S) (the "Lessee"), exchanged
their ownership interests in the Vessels for aggregate consideration of
$11,565,375, consisting of 1,987,000 newly issued shares (at $1.50 per share) of
common stock in Semele, a purchase money note of $8,219,500 (the "Note") and
cash of $365,375. Semele is a Delaware corporation organized on April 14, 1987
and has its common stock listed on NASDAQ. At the date of the exchange
transaction, the common stock of Semele had a net book value of approximately
$1.50 per share and closing market value of $1.00 per share. Semele has one
principal real estate asset consisting of an undeveloped 274 acre parcel of land
near Malibu, California ("Rancho Malibu").

      The exchange was organized through an intermediary company (Equis Exchange
LLC, 99% owned by Semele and 1% owned by EFG), which was established for the
sole purpose of facilitating the exchange. There were no fees paid to EFG by
Equis Exchange LLC or Semele or by any other party that otherwise would not have
been paid to EFG had the Partnership sold its beneficial interest in the Vessels
directly to the Lessee. The Lessee prepaid all of its remaining contracted
rental obligations and purchased the Vessels in two closings occurring on May 6,
1997 and May 12, 1997. The Note was repaid with $3,800,000 of cash and delivery
of a $4,419,500 note from Semele (the "Semele Note").

      As a result of the vessel exchange transaction and its original 66.15%
beneficial ownership interest in Dove Arrow, one of the three Vessels, the
Partnership received $840,676 in cash, became the beneficial owner of 407,970
shares of Semele common stock (valued at $611,955 ($1.50 per share) at the time
of the exchange transaction) and received a beneficial interest in the Semele
Note of $898,405. The Semele Note bears an


                                     - 4 -
<PAGE>

annual interest rate of 10% and will be amortized over three years with
mandatory principal reductions, if and to the extent that net proceeds are
received by Semele from the sale or refinancing of Rancho Malibu.

      Cash equal to the amount of the Semele Note was placed in escrow for the
benefit of Semele in a segregated account pending the outcome of certain
shareholder proposals. Specifically, as part of the exchange, Semele agreed to
seek consent ("Consent") from its shareholders to: (1) amend its certificate of
incorporation and by-laws; (2) make additional amendments to restrict the
acquisition of its common stock in a way to protect Semele's net operating loss
carry-forwards, and (3) engage EFG to provide administrative services to Semele,
which services EFG will provide at cost. On October 21, 1997, such Consent was
obtained from Semele's shareholders. The Consent also allowed for (i) the
election of a new Board of Directors nominated by EFG for terms of up to three
years and an increase in the size of the Board to as many as nine members,
provided a majority of the Board shall consist of members independent of Semele,
EFG or any affiliate; and (ii) an amendment extending Semele's life to perpetual
and changing its name from Banyan Strategic Land Fund II. Contemporaneously with
the Consent being obtained, Semele declared a $0.20 per share dividend to be
paid on all shares, including those beneficially owned by the Partnership. A
dividend of $81,594 was paid to the Partnership on November 17, 1997. This
dividend represented a return of equity to the Partnership, which
proportionately reduced the Partnership's investment in Semele.

      In September 1995, the Partnership transferred its 39.9% ownership
interest in the United Aircraft, pursuant to the rules of a like-kind exchange
for income tax reporting purposes. The Partnership received aggregate cash
consideration of $3,287,253 including $257,419 for rent accrued through the
transfer date. A portion of the consideration was used to satisfy the balance of
outstanding debt and interest of $500,746. The net cash consideration of
$2,529,088 was deposited into a special-purpose escrow account through a
third-party exchange agent pending the completion of the aircraft exchange. The
Partnership's interest in the Aircraft had a net book value of $4,172,830 at the
date of transfer and resulted in a net loss for financial reporting purposes of
$1,142,996.

      In November 1995, the Partnership partially replaced the United Aircraft
with a 17.39% interest in the Southwest Aircraft, at an aggregate cost of
$2,546,156. To acquire the interests in the Southwest Aircraft, the Partnership
obtained financing of $1,900,028 from a third-party lender and utilized $646,128
of the cash consideration received from the transfer of the United Aircraft. The
remaining ownership interest of 82.61% in the Southwest Aircraft is held by
affiliated equipment leasing programs sponsored by EFG.

      Additionally, in March 1996, the Partnership completed the replacement of
the United Aircraft with the acquisitions of a 14.39% ownership interest in the
Finnair Aircraft and a 25.82% ownership interest in the Reno Aircraft at a total
cost to the Partnership of $4,027,969 and $3,507,561, respectively. To acquire
the ownership interest in the Finnair Aircraft, the Partnership paid $1,346,709
in cash and obtained financing of $2,681,260 from a third-party lender. To
acquire the ownership interest in the Reno Aircraft, the Partnership paid
$599,494 in cash and obtained financing of $2,908,067 from a third-party lender.
The remaining ownership interests of 85.61% and 74.18% of the Finnair Aircraft
and Reno Aircraft, respectively, are held by affiliated equipment leasing
programs sponsored by EFG.

      During 1995, the Partnership transferred its ownership interest in certain
trailers, previously leased to The Atchison Topeka and Santa Fe Railroad to a
third party for cash consideration of $89,500. The trailers had an aggregate net
book value of $49,065 at the date of transfer resulting in a net gain, for
financial statement purposes, of $40,435. The transaction was structured as a
like-kind exchange for income tax reporting purposes. In 1995, the Partnership
replaced these trailers with comparable trailers and leased such equipment to a
new lessee. The net carrying value of the new trailers, $345,801, was net of
$40,435, representing the amount of gain deferred on the original trailers. The
Partnership funded this transaction with the cash consideration received and a
third-party installment note payable of $296,736.

      It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.


                                     - 5 -
<PAGE>

      The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

      The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. Consequently, the amount of
future gains or losses reported in the financial statements may not be
indicative of the total residual value the Partnership achieved from leasing the
equipment.

      Depreciation and amortization expense was $2,284,020, $3,703,293 and
$4,107,909 for the years ended December 31, 1997, 1996 and 1995, respectively.
For financial reporting purposes, to the extent that an asset is held on primary
lease term, the Partnership depreciates the difference between (i) the cost of
the asset and (ii) the estimated residual value of the asset at the date of
primary lease expiration on a straight-line basis over such term. For purposes
of this policy, estimated residual values represent equipment values at the date
of the primary lease expiration. To the extent that equipment is held beyond its
primary lease term, the Partnership continues to depreciate the remaining net
book value of the asset on a straight-line basis over the asset's remaining
economic life.

      Interest expense was $466,915 or 10.7% of lease revenue in 1997, $645,442
or 13.1% of lease revenue in 1996 and $417,108 or 8% of lease revenue in 1995.
The overall increase in interest expense from 1995 to 1997 was due primarily to
interest incurred in connection with the leveraging obtained to finance the
aircraft exchange transactions, discussed above. In the future, interest expense
is expected to decline in amount and as a percentage of lease revenue as the
principal balance of notes payable is reduced through the application of rent
receipts to outstanding debt.

      Management fees were approximately 3.8%, 3.1% and 2.9% of lease revenue
during the years ended December 31, 1997, 1996 and 1995, respectively.
Management fees are based on 5% of gross lease revenue generated by operating
leases and 2% of gross lease revenue generated by full payout leases.

      Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. In certain cases, equipment storage or
repairs and maintenance costs may be incurred in connection with equipment being
remarketed. Collectively, operating expenses represented 4.8%, 4.1% and 2.6% of
lease revenue during the years ended December 31, 1997, 1996 and 1995,
respectively. The increase in operating expenses from 1996 to 1997 is
principally attributable to an increase in professional service costs and
administrative charges. The increase in operating expenses from 1995 to 1996 was
due principally to costs incurred in connection with the aircraft like-kind
exchange transactions, discussed above. The amount of future operating expenses
cannot be predicted with certainty; however, such expenses are usually higher
during the acquisition and liquidation phases of a partnership. Other
fluctuations typically occur in relation to the volume and timing of remarketing
activities.

LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS

      The Partnership by its nature is a limited life entity which was
established for specific purposes described in the preceding "Overview". As an
equipment leasing program, the Partnership's principal operating activities
derive from asset rental transactions. Accordingly, the Partnership's principal
source of cash from operations is provided by the collection of periodic rents.
These cash inflows are used to satisfy debt service obligations associated with
leveraged leases, and to pay management fees and operating costs. Operating
activities generated net cash inflows of $3,771,967, $4,586,028 and $4,543,623
in 1997, 1996 and 1995, respectively. Future renewal, re-lease and equipment
sale activities will cause a decline in the Partnership's lease revenue and
corresponding sources of operating cash. Overall, expenses associated with
rental activities, such as management fees, and net cash flow from operating
activities will also continue to decline as the Partnership experiences a higher
frequency of remarketing events.


                                     - 6 -
<PAGE>

      Ultimately, the Partnership will dispose of all assets under lease. This
will occur principally through sale transactions whereby each asset will be sold
to the existing lessee or to a third party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.

      Cash expended for equipment acquisitions and cash realized from asset
disposal transactions are reported under investing activities on the
accompanying Statement of Cash Flows. For the year ended December 31, 1997, the
Partnership realized net cash proceeds of $876,740, compared to $737,944 in 1996
and $253,473 in 1995. Future inflows of cash from asset disposals will vary in
timing and amount and will be influenced by many factors including, but not
limited to, the frequency and timing of lease expirations, the type of equipment
being sold, its condition and age, and future market conditions. The Partnership
expended $63,243 in 1996 in connection with the aircraft like-kind exchange
transactions referred to above. During 1995, the Partnership expended $43,831 to
upgrade certain equipment. There were no equipment acquisitions during 1997.

      As a result of the vessel exchange transaction (see Results of Operations)
the Partnership became the beneficial owner of 407,970 shares of Semele common
stock valued at $611,955 ($1.50 per share). This investment was reduced by a
dividend of $81,594 received in November 1997 representing a return of equity to
the Partnership. The Partnership also received a beneficial interest in the
Semele Note of $898,405 in connection with the exchange.

      In accordance with the Financial Accounting Standard Board's Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
marketable equity securities classified as available-for-sale are required to be
carried at fair value. As such, the Partnership reduced the carrying value of
its investment in Semele common stock to $0.75 per share (the quoted price of
the Semele stock on NASDAQ at December 31, 1997) resulting in an unrealized loss
in 1997 of $224,385 which was reported as a separate component of partner's
capital. However, the General Partner believes that the underlying tangible
assets of Semele, particularly the Rancho Malibu property, can be sold or
developed on a tax free basis due to Semele's net operating loss carryforwards
and can provide an attractive economic return to the Partnership.

      The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. Each note payable is recourse
only to the specific equipment financed and to the minimum rental payments
contracted to be received during the debt amortization period (which period
generally coincides with the lease rental term). As rental payments are
collected, a portion or all of the rental payment is used to repay the
associated indebtedness. In addition, during 1997 the Partnership utilized a
portion of its available cash to repay certain of its debt obligations. In
future years, the amount of cash used to repay debt obligations is scheduled to
decline as the principal balance of notes payable is reduced through the
collection and application of rents. The Partnership also has balloon payment
obligations at the expiration of the respective primary lease terms related to
the Finnair Aircraft and the Reno Aircraft of $1,367,145 and $823,037,
respectively.

      Cash distributions to the General and Limited Partners are declared and
generally paid within fifteen days following the end of each calendar quarter.
The payment of such distributions is presented as a component of financing
activities. For the year ended December 31, 1997, the Partnership declared total
cash distributions of Distributable Cash From Operations and Distributable Cash
From Sales and Refinancings of $818,606. In accordance with the Amended and
Restated Agreement and Certificate of Limited Partnership, the Limited Partners
were allocated 95% of these distributions, or $777,676, and the General Partner
was allocated 5%, or $40,930. The fourth quarter 1997 cash distribution was paid
on January 13, 1998.

      Cash distributions paid to the Limited Partners consist of both a return
of and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date. Future market conditions, technological changes, the ability
of EFG to manage and


                                     - 7 -
<PAGE>

remarket the assets, and many other events and circumstances, could enhance or
detract from individual asset yields and the collective performance of the
Partnership's equipment portfolio.

      The future liquidity of the Partnership will be influenced by the
foregoing, as well as the outcome of the Class Action Lawsuit described in Note
8 to the accompanying financial statements. The General Partner anticipates that
cash proceeds resulting from the collection of contractual rents and the outcome
of residual activities will satisfy the Partnership's future expense
obligations. However, the amount of cash available for distribution in future
periods will fluctuate. Equipment lease expirations and asset disposals will
cause the Partnership's net cash from operating activities to diminish over
time; and equipment sale proceeds will vary in amount and period of realization.
In addition, the Partnership may be required to incur asset refurbishment or
upgrade costs in connection with future remarketing activities Accordingly,
fluctuations in the level of quarterly cash distributions are anticipated.


                                     - 8 -
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

To the Partners of American Income Fund I-D,
a Massachusetts Limited Partnership:

      We have audited the accompanying statements of financial position of
American Income Fund I-D, a Massachusetts Limited Partnership as of December 31,
1997 and 1996, and the related statements of operations, changes in partners'
capital, and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Income Fund I-D, a
Massachusetts Limited Partnership at December 31, 1997 and 1996, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

      Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Additional Financial
Information identified in the Index to Annual Report to the Partners is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

                                                               ERNST & YOUNG LLP

Boston, Massachusetts
March 10, 1998

                             AMERICAN INCOME FUND I-D,


                                     - 9 -
<PAGE>

                       a Massachusetts Limited Partnership

                         STATEMENT OF FINANCIAL POSITION
                           December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                              1997                         1996
                                                      -------------------          -------------------

<S>                                                   <C>                          <C>
ASSETS

Cash and cash equivalents                             $         3,038,635          $         1,627,768

Rents receivable                                                  147,712                      580,171

Accounts receivable - affiliate                                   367,376                      146,455

Note receivable - affiliate                                       898,405                           --

Investment securities - affiliate                                 305,975                           --

Equipment at cost, net of accumulated
     depreciation of $8,800,492 and $13,935,898
     at December 31, 1997 and 1996, respectively               10,111,760                   15,009,966
                                                      -------------------          -------------------
        Total assets                                  $        14,869,863          $        17,364,360
                                                      ===================          ===================

LIABILITIES AND PARTNERS' CAPITAL

Notes payable                                         $         5,334,349          $         7,780,603
Accrued interest                                                   36,923                      100,187
Accrued liabilities                                                 9,200                       22,750
Accrued liabilities - affiliate                                    27,939                       34,144
Deferred rental income                                            106,513                      117,405
Cash distributions payable to partners                            163,722                      218,296
                                                      -------------------          -------------------

        Total liabilities                                       5,678,646                    8,273,385
                                                      -------------------          -------------------
Partners' capital (deficit):
     General Partner                                             (458,243)                    (463,256)
     Limited Partnership Interests
     (829,521.30 Units; initial purchase
     price of $25 each)                                         9,649,460                    9,554,231
                                                      -------------------          -------------------

        Total partners' capital                                 9,191,217                    9,090,975
                                                      -------------------          -------------------

        Total liabilities and partners' capital       $        14,869,863          $        17,364,360
                                                      ===================          ===================
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.


                                     - 10 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

                             STATEMENT OF OPERATIONS
              for the years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                        1997                       1996                      1995
                                                 ------------------         ------------------        ------------------

<S>                                              <C>                        <C>                       <C>
Income:

     Lease revenue                               $        4,364,091         $        4,939,781        $        5,241,427

     Interest income                                        116,523                    108,909                    27,659

     Interest income - affiliate                             17,719                     18,511                    25,788

     Gain (loss) on sale of equipment                       512,239                    459,596                   (88,734)

     Loss on exchange of equipment                         (739,326)                        --                (1,142,996)
                                                 ------------------         ------------------        ------------------

         Total income                                     4,271,246                  5,526,797                 4,063,144
                                                 ------------------         ------------------        ------------------

Expenses:

     Depreciation and amortization                        2,284,020                  3,703,293                 4,107,909

     Interest expense                                       466,915                    645,442                   417,108

     Equipment management fees
       - affiliate                                          165,486                    154,069                   151,346

     Operating expenses - affiliate                         211,592                    203,579                   136,881
                                                 ------------------         ------------------        ------------------

         Total expenses                                   3,128,013                  4,706,383                 4,813,244
                                                 ------------------         ------------------        ------------------

Net income (loss)                                $        1,143,233         $          820,414        $         (750,100)
                                                 ==================         ==================        ==================

Net income (loss)
     per limited partnership unit                $             1.31         $             0.94        $            (0.86)
                                                 ==================         ==================        ==================

Cash distributions declared
     per limited partnership unit                $             0.94         $             1.00        $             1.25
                                                 ==================         ==================        ==================
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.


                                     - 11 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
              for the years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                        General                   Limited Partners
                                                         Partner         ---------------------------------
                                                         Amount               Units             Amount              Total
                                                     --------------      -------------      --------------     --------------

<S>                                                  <C>                    <C>             <C>                <C>
Balance at December 31, 1994                         $     (368,539)        829,521.30      $   11,353,857     $   10,985,318

Net loss - 1995                                             (37,505)                --            (712,595)          (750,100)

Cash distributions declared                                 (54,574)                --          (1,036,902)        (1,091,476)
                                                     --------------      -------------      --------------     --------------

Balance at December 31, 1995                               (460,618)        829,521.30           9,604,360          9,143,742

Net income - 1996                                            41,021                 --             779,393            820,414

Cash distributions declared                                 (43,659)                --            (829,522)          (873,181)
                                                     --------------      -------------      --------------     --------------

Balance at December 31, 1996                               (463,256)        829,521.30           9,554,231          9,090,975

Net income - 1997                                            57,162                 --           1,086,071          1,143,233

Unrealized loss on investment securities                    (11,219)                --            (213,166)          (224,385)

Cash distributions declared                                 (40,930)                --            (777,676)          (818,606)
                                                     --------------      -------------      --------------     --------------

Balance at December 31, 1997                         $     (458,243)        829,521.30      $    9,649,460     $    9,191,217
                                                     ==============      =============      ==============     ==============
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.


                                     - 12 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

                             STATEMENT OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                             1997                    1996                    1995
                                                      ----------------        ----------------         ----------------
<S>                                                   <C>                     <C>                      <C>
Cash flows from (used in) operating activities:

Net income (loss)                                     $      1,143,233        $        820,414         $       (750,100)

Adjustments to reconcile net income (loss)
     to net cash from operating activities:
         Depreciation and amortization                       2,284,020               3,703,293                4,107,909
         (Gain) loss on sale of equipment                     (512,239)               (459,596)                  88,734
         Loss on exchange of equipment                         739,326                      --                1,142,996

Changes in assets and liabilities:
     Decrease (increase) in:
         Rents receivable                                      432,459                 211,998                 (122,349)
         Accounts receivable - affiliate                      (220,921)                 80,204                  (95,193)
         Note receivable - affiliate                                --                 209,910                  159,942
     Increase (decrease) in:
         Accrued interest                                      (63,264)                 42,249                  (13,361)
         Accrued liabilities                                   (13,550)                (85,635)                  26,532
         Accrued liabilities - affiliate                        (6,205)                 12,150                   21,994
         Deferred rental income                                (10,892)                 51,041                  (23,481)
                                                      ----------------        ----------------         ----------------
           Net cash from operating activities                3,771,967               4,586,028                4,543,623
                                                      ----------------        ----------------         ----------------

Cash flows from (used in) investing activities:
     Dividend received                                          81,594                      --                       --
     Purchase of equipment                                          --                 (63,243)                 (43,831)
     Proceeds from equipment sales/exchanges                   876,740                 737,944                  253,473
                                                      ----------------        ----------------         ----------------
           Net cash from investing activities                  958,334                 674,701                  209,642
                                                      ----------------        ----------------         ----------------
Cash flows used in financing activities:
     Principal payments - notes payable                     (2,446,254)             (3,112,460)              (3,543,194)
     Distributions paid                                       (873,180)               (927,754)              (1,091,476)
                                                      ----------------        ----------------         ----------------
           Net cash used in financing activities            (3,319,434)             (4,040,214)              (4,634,670)
                                                      ----------------        ----------------         ----------------

Net increase in cash and cash equivalents                    1,410,867               1,220,515                  118,595

Cash and cash equivalents at beginning of year               1,627,768                 407,253                  288,658
                                                      ----------------        ----------------         ----------------

Cash and cash equivalents at end of year              $      3,038,635        $      1,627,768         $        407,253
                                                      ================        ================         ================
Supplemental disclosure of cash flow information:
     Cash paid during the year for interest           $        530,179        $        603,193         $        430,469
                                                      ================        ================         ================

Supplemental disclosure of non-cash investing and financing activities:
      See Note 4 to the financial statements regarding the reduction of the
Partnership's carrying value of its investment securities - affiliate.

      Also, see Notes 3 and 5 to the financial statements.
</TABLE>

                 The accompanying notes are an integral part of
                          these financial statements.


                                     - 13 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                December 31, 1997

NOTE 1 - ORGANIZATION AND PARTNERSHIP MATTERS

      American Income Fund I-D, a Massachusetts Limited Partnership (the
"Partnership") was organized as a limited partnership under the Massachusetts
Uniform Limited Partnership Act (the "Uniform Act") on May 30, 1991, for the
purpose of acquiring and leasing to third parties a diversified portfolio of
capital equipment. Partners' capital initially consisted of contributions of
$1,000 from the General Partner (AFG Leasing VI Incorporated) and $100 from the
Initial Limited Partner (AFG Assignor Corporation). On August 30, 1991 the
Partnership issued 829,521.30 units of limited partnership interest (the
"Units") to 1,234 investors. Included in the 829,521.30 units were 1,572.30
bonus units. The Partnership's General Partner, AFG Leasing VI Incorporated, is
a Massachusetts corporation formed in 1990 and an affiliate of Equis Financial
Group Limited Partnership (formerly American Finance Group), a Massachusetts
limited partnership ("EFG"). The General Partner is not required to make any
other capital contributions except as may be required under the Uniform Act and
Section 6.1(b) of the Amended and Restated Agreement and Certificate of Limited
Partnership (the "Restated Agreement, as amended").

      Significant operations commenced August 30, 1991 when the Partnership made
its initial equipment purchase. Pursuant to the Restated Agreement, as amended,
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Limited Partners and 5% to the General
Partner.

      Under the terms of a Management Agreement between the Partnership and EFG,
management services are provided by EFG to the Partnership at fees which the
General Partner believes to be competitive for similar services (see Note 5).

      EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Equipment Manager or Advisor to the Partnership and
several other Direct-Participation equipment leasing programs sponsored or
co-sponsored by EFG (the "Other Investment Programs"). The Company arranges to
broker or originate equipment leases, acts as remarketing agent and asset
manager, and provides leasing support services, such as billing, collecting, and
asset tracking.

      The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President and Chief Executive Officer. Equis Corporation also owns
a controlling 1% general partner interest in EFG's 99% limited partner, GDE
Acquisition Limited Partnership ("GDE LP"). Equis Corporation and GDE LP were
established in December 1994 by Mr. Engle for the sole purpose of acquiring the
business of AFG.

      In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group," and its acronym, to a third party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Partnership and the Other Investment Programs and to continue managing all
assets owned by the Partnership and the Other Investment Programs.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


                                     - 14 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

STATEMENT OF CASH FLOWS

      The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and reverse repurchase agreements with overnight maturities.
Under the terms of the agreements, title to the underlying securities passes to
the Partnership. The securities underlying the agreements are book entry
securities. At December 31, 1997, the Partnership had $2,935,518 invested in
federal agency discount notes and in reverse repurchase agreements secured by
U.S. Treasury Bills or interests in U.S. Government securities.

REVENUE RECOGNITION

      Rents are payable to the Partnership monthly, quarterly or semi-annually
and no significant amounts are calculated on factors other than the passage of
time. The leases are accounted for as operating leases and are noncancellable.
Rents received prior to their due dates are deferred. Future minimum rents of
$6,539,899 are due as follows:

<TABLE>

     <S>                                             <C>
     For the year ending December 31, 1998           $ 2,165,022
                                      1999             1,550,374
                                      2000               887,486
                                      2001               845,750
                                      2002               845,750
                                Thereafter               245,517
                                                     -----------
                                     Total           $ 6,539,899
                                                     ===========
</TABLE>

      Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1997, 1996 and 1995 is as
follows:

<TABLE>
<CAPTION>
                                    1997            1996              1995
                                ------------    ------------      ------------
<S>                             <C>             <C>               <C>
Gearbulk Shipowning Ltd         $  1,045,105    $  1,062,911      $  1,060,462
Finnair OY                      $    620,026    $         --      $         --
Southwest Airlines, Inc.        $    500,832    $    500,832      $         --
General Motors Corporation      $    496,120    $    565,022      $         --
Reno Air, Inc.                  $    444,213    $         --      $         --
United Air Lines, Inc.          $         --    $         --      $    763,478
The Helen Mining Company        $         --    $         --      $    627,226
</TABLE>

USE OF ESTIMATES

      The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

EQUIPMENT ON LEASE


                                     - 15 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

      All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment cost represents asset base price plus acquisition
fees and was determined in accordance with the Restated Agreement, as amended,
and certain regulatory guidelines. Asset base price is affected by the
relationship of the seller to the Partnership as summarized herein. Where the
seller of the equipment was EFG or an affiliate, asset base price was the lower
of (i) the actual price paid for the equipment by EFG or the affiliate plus all
actual costs accrued by EFG or the affiliate while carrying the equipment less
the amount of all rents earned by EFG or the affiliate prior to selling the
equipment or (ii) fair market value as determined by the General Partner in its
best judgment, including all liens and encumbrances on the equipment and other
actual expenses. Where the seller of the equipment was a third party who did not
manufacture the equipment, asset base price was the lower of (i) the price
invoiced by the third party or (ii) fair market value as determined by the
General Partner. Where the seller of the equipment was a third party who also
manufactured the equipment, asset base price was the manufacturer's invoice
price, which price was considered to be representative of fair market value.

DEPRECIATION AND AMORTIZATION

      The Partnership's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset is
held on primary lease term, the Partnership depreciates the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term. For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of primary
lease expiration. To the extent that an asset is held beyond its primary lease
term, the Partnership continues to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. Adjustments to
reduce the net carrying value of equipment are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.

      The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.

      Organization costs were amortized using the straight-line method over a
period of five years.

INVESTMENT SECURITIES - AFFILIATE

      The Partnership's investment in Semele Group, Inc. is considered to be
available-for-sale and as such is carried at fair value with unrealized gains
and losses reported as a separate component of Partner's Capital (see Note 4).

ACCRUED LIABILITIES - AFFILIATE

      Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities - Affiliate (see Note 5).

ALLOCATION OF PROFITS AND LOSSES


                                     - 16 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

      For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the Limited
Partners and 5% to the General Partner). See Note 7 for allocation of income or
loss for income tax purposes.

NET INCOME (LOSS) AND CASH DISTRIBUTIONS PER UNIT

      Net income (loss) and cash distributions per Unit are based on 829,521.30
Units outstanding during each of the three years in the period ended December
31, 1997 and computed after allocation of the General Partner's 5% share of net
income (loss) and cash distributions.

PROVISION FOR INCOME TAXES

      No provision or benefit from income taxes is included in the accompanying
financial statements. The Partners are responsible for reporting their
proportionate shares of the Partnership's taxable income or loss and other tax
attributes on their tax returns.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

      In 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued. This
statement establishes standards for reporting comprehensive income and its
components and requires this disclosure be added as a new section in a financial
statement. This statement is effective for fiscal years beginning after December
31, 1997. The Partnership will adopt the new disclosures required by SFAS No.
130 in 1998.

NOTE 3 - EQUIPMENT

      The following is a summary of equipment owned by the Partnership at
December 31, 1997. Remaining Lease Term (Months), as used below, represents the
number of months remaining from December 31, 1997 under contracted lease terms
and is presented as a range when more than one lease agreement is contained in
the stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.

<TABLE>
<CAPTION>
                             Remaining
                            Lease Term      Equipment
      Equipment Type          (Months)       at Cost             Location
-----------------------     ----------      ---------     ----------------------
<S>                         <C>             <C>           <C>

</TABLE>
                                     - 17 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

<TABLE>
<S>                               <C>     <C>             <C>
Aircraft                          19-60   $ 10,081,685    NV/TX/Foreign
Materials handling                 0-20      3,762,975    CA/GA/IA/IL/IN/MA/MI/MN/MO
                                                          NC/NV/NY/OH/PA/SC
Construction and mining            0-19      2,382,634    IL/MI/NC/NY/PA/WV
Trailers/intermodal containers     0-66      2,106,595    CA/KS/KY/OK
Retail store fixtures                15        316,563    FL
Furniture and fixtures                0         97,082    NY
Communications                        0         67,899    AL/CA/FL/NC/OR/WA
Tractors and heavy duty trucks        0         62,319    OR
Photocopying                        0-4         34,500    IL/MN
                                          ------------

                   Total equipment cost     18,912,252

               Accumulated depreciation     (8,800,492)
                                          ------------

          Equipment, net of accumulated
                           depreciation   $ 10,111,760
                                          ============
</TABLE>

      In September 1995, the Partnership transferred its 39.9% ownership
interest in an aircraft leased to United Air Lines, Inc. (the "United
Aircraft"), pursuant to the rules for a like-kind exchange for income tax
reporting purposes. In November 1995, the Partnership partially replaced the
United Aircraft with a 17.39% interest in three aircraft leased to Southwest
Airlines, Inc. (the "Southwest Aircraft"), at an aggregate cost of $2,546,156.
To acquire the interests in the Southwest Aircraft, the Partnership obtained
financing of $1,900,028 from a third-party lender and utilized $646,128 of the
cash consideration received from the transfer of the United Aircraft. The
remaining ownership interest of 82.61% in the Southwest Aircraft is held by
affiliated equipment leasing programs sponsored by EFG.

      Additionally, in March 1996, the Partnership completed the replacement of
the United Aircraft with the acquisitions of a 14.39% ownership interest in two
aircraft leased to Finnair OY (the "Finnair Aircraft") and a 25.82% ownership
interest in an aircraft leased to Reno Air, Inc. (the "Reno Aircraft") at a
total cost to the Partnership of $4,027,969 and $3,507,561, respectively. To
acquire the ownership interest in the Finnair Aircraft, the Partnership paid
$1,346,709 in cash and obtained financing of $2,681,260 from a third-party
lender. To acquire the ownership interest in the Reno Aircraft, the Partnership
paid $599,494 in cash and obtained financing of $2,908,067 from a third-party
lender. The remaining ownership interests of 85.61% and 74.18% in the Finnair
Aircraft and Reno Aircraft, respectively, are held by affiliated equipment
leasing programs sponsored by EFG.

      During 1995, the Partnership transferred its ownership interest in certain
trailers, previously leased to The Atchison Topeka and Santa Fe Railroad to a
third party for cash consideration of $89,500. The trailers had an aggregate net
book value of $49,065 at the date of transfer resulting in a net gain, for
financial statement purposes, of $40,435. The transaction was structured as a
like-kind exchange for income tax reporting purposes. In 1995, the Partnership
replaced these trailers with comparable trailers and leased such equipment to a
new lessee. The net carrying value of the new trailers, $345,801, was net of
$40,435, representing the amount of gain deferred on the original trailers. The
Partnership funded this transaction with the net cash consideration received and
a third-party installment note payable of $296,736.

      In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or an
affiliated equipment leasing program sponsored by EFG. The Partnership and each
affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment. Proportionate equipment ownership
enables the Partnership to further diversify its equipment portfolio by
participating in the ownership of selected assets, thereby reducing the general
levels of risk which could result from a concentration in any single equipment
type, industry or lessee. At December 31, 1997, the Partnership's equipment
portfolio


                                     - 18 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

included equipment having a proportionate original cost of $10,452,312,
representing approximately 55% of total equipment cost.

      Certain of the equipment and related lease payment streams were used to
secure term loans with third-party lenders. The preceding summary of equipment
includes leveraged equipment having an original cost of approximately
$10,082,000 and a net book value of approximately $8,454,000 at December 31,
1997 (see Note 6).

      Generally, the costs associated with maintaining, insuring and operating
the Partnership's equipment are incurred by the respective lessees pursuant to
terms specified in their individual lease agreements with the Partnership.

      As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms. The summary above includes equipment held
for re-lease or sale with an original cost and net book value of approximately
$553,000 and $4,000, respectively. The General Partner is actively seeking the
sale or re-lease of all equipment not on lease. In addition, the summary above
also includes equipment being leased on a month-to-month basis.

NOTE 4 - INVESTMENT SECURITIES - AFFILIATE / NOTE RECEIVABLE - AFFILIATE

      On April 30, 1997, the vessel partnerships, in which the Partnership and
certain affiliated investment programs are limited partners and through which
the Partnership and the affiliated investment programs shared economic interests
in three cargo vessels (the "Vessels") leased by Gearbulk Shipowning Ltd
(formerly Kristian Gerhard Jebsen Skipsrederi A/S) (the "Lessee"), exchanged
their ownership interests in the Vessels for aggregate consideration of
$11,565,375, consisting of 1,987,000 newly issued shares (at $1.50 per share) of
common stock in Semele Group, Inc. ("Semele") (formerly Banyan Strategic Land
Fund II), a purchase money note of $8,219,500 (the "Note") and cash of $365,375.
Semele is a Delaware corporation organized on April 14, 1987 and has its common
stock listed on NASDAQ. At the date of the exchange transaction, the common
stock of Semele had a net book value of approximately $1.50 per share and
closing market value of $1.00 per share. Semele has one principal real estate
asset consisting of an undeveloped 274 acre parcel of land near Malibu,
California ("Rancho Malibu").

      The exchange was organized through an intermediary company (Equis Exchange
LLC, 99% owned by Semele and 1% owned by EFG), which was established for the
sole purpose of facilitating the exchange. There were no fees paid to EFG by
Equis Exchange LLC or Semele or by any other party that otherwise would not have
been paid to EFG had the Partnership sold its beneficial interest in the Vessels
directly to the Lessee. The Lessee prepaid all of its remaining contracted
rental obligations and purchased the Vessels in two closings occurring on May 6,
1997 and May 12, 1997. The Note was repaid with $3,800,000 of cash and delivery
of a $4,419,500 note from Semele (the "Semele Note").

      As a result of the exchange transaction and its original 66.15% beneficial
ownership interest in Dove Arrow, one of the three Vessels, the Partnership
received $840,676 in cash, became the beneficial owner of 407,970 shares of
Semele common stock (valued at $611,955 ($1.50 per share) at the time of the
exchange transaction) and received a beneficial interest in the Semele Note of
$898,405. The Semele Note bears an annual interest rate of 10% and will be
amortized over three years with mandatory principal reductions, if and to the
extent that net proceeds are received by Semele from the sale or refinancing of
Rancho Malibu. The Partnership's interest in the vessel had an original cost and
net book value of $5,091,464 and $2,307,445, respectively. The proceeds realized
by the Partnership of $1,568,119 resulted in a net loss, for financial statement
purposes, of $739,326. In


                                     - 19 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

addition, as this vessel was disposed of prior to the expiration of the related
lease term, the Partnership received a prepayment of the remaining contracted
rent due under the vessel's lease agreement of $782,917.

      Cash equal to the amount of the Semele Note was placed in escrow for the
benefit of Semele in a segregated account pending the outcome of certain
shareholder proposals. Specifically, as part of the exchange, Semele agreed to
seek consent ("Consent") from its shareholders to: (1) amend its certificate of
incorporation and by-laws; (2) make additional amendments to restrict the
acquisition of its common stock in a way to protect Semele's net operating loss
carry-forwards, and (3) engage EFG to provide administrative services to Semele,
which services EFG will provide at cost. On October 21, 1997, such Consent was
obtained from Semele's shareholders. The Consent also allowed for (i) the
election of a new Board of Directors nominated by EFG for terms of up to three
years and an increase in the size of the Board to as many as nine members,
provided a majority of the Board shall consist of members independent of Semele,
EFG or any affiliate; and (ii) an amendment extending Semele's life to perpetual
and changing its name from Banyan Strategic Land Fund II. Contemporaneously with
the Consent being obtained, Semele declared a $0.20 per share dividend to be
paid on all shares, including those beneficially owned by the Partnership. A
dividend of $81,594 was paid to the Partnership on November 17, 1997. This
dividend represented a return of equity to the Partnership, which
proportionately reduced the Partnership's investment in Semele. In May 1997,
Gary D. Engle, President and Chief Executive Officer of EFG, was elected to the
Board of Directors of Semele and in October 1997, James A. Coyne, Executive Vice
President of EFG was elected Semele's President and Chief Operating Officer.

      In accordance with the Financial Accounting Standard Board's Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
marketable equity securities classified as available-for-sale are required to be
carried at fair value. As such, the Partnership reduced the carrying value of
its investment in Semele common stock to $0.75 per share (the quoted price of
the Semele stock on NASDAQ at December 31, 1997) resulting in an unrealized loss
in 1997 of $224,385 which was reported as a separate component of partner's
capital.

NOTE 5 - RELATED PARTY TRANSACTIONS

All operating expenses incurred by the Partnership are paid by EFG on behalf of
the Partnership and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during the years ended December 31, 1997, 1996 and
1995, which were paid or accrued by the Partnership to EFG or its Affiliates,
are as follows:

<TABLE>
<CAPTION>
                                      1997            1996            1995
                                  ------------    ------------    ------------
<S>                               <C>             <C>             <C>
Equipment management fees         $    165,486    $    154,069    $    151,346
Administrative charges                  62,544          39,024          21,000
Reimbursable operating
   expenses due to third parties       149,048         164,555         115,881
                                  ------------    ------------    ------------
                   Total          $    377,078    $    357,648    $    288,227
                                  ============    ============    ============
</TABLE>

      As provided under the terms of the Management Agreement, EFG is
compensated for its services to the Partnership. Such services include all
aspects of acquisition, management and sale of equipment. For acquisition
services, EFG is compensated by an amount equal to 2.23% of Equipment Base Price
paid by the Partnership. For management services, EFG is compensated by an
amount equal to the lesser of (i) 5% of gross operating lease rental revenue and
2% of gross full payout lease rental revenue received by the Partnership or (ii)
fees which the General Partner reasonably believes to be competitive for similar
services for similar equipment. Both of these fees are subject to certain
limitations defined in the Management Agreement. Compensation to EFG for
services connected to the sale of equipment is calculated as the lesser of (i)
3% of gross sale proceeds


                                     - 20 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

or (ii) one-half of reasonable brokerage fees otherwise payable under arm's
length circumstances. Payment of the remarketing fee is subordinated to Payout
and is subject to certain limitations defined in the Management Agreement.

      Administrative charges represent amounts owed to EFG, pursuant to Section
9.4(c) of the Restated Agreement, as amended, for persons employed by EFG who
are engaged in providing administrative services to the Partnership.
Reimbursable operating expenses due to third parties represent costs paid by EFG
on behalf of the Partnership which are reimbursed to EFG.

      In 1991, the Partnership acquired 900 intermodal cargo containers, at a
cost of $1,840,140, and leased such containers to ICCU Containers, S.p.A.
("ICCU"), an affiliate of Clou Investments (U.S.A.), Inc. ("CLOU"), which
formerly owned a minority interest in AFG Holdings Illinois Limited Partnership,
formerly a partner in AFG. The ability of ICCU to fulfill all of its obligations
under the lease contract deteriorated, in EFG's view, in 1994. As a result, EFG,
on the Partnership's behalf, negotiated with other parties to either assume the
lease obligations of ICCU or acquire the containers. As a result of these
negotiations, the Partnership transferred 897 containers, having a net book
value of $970,944, to a third party on November 30, 1994. The Partnership
received, as settlement from ICCU and the third party, consideration as follows:
(i) a contractual right to receive comparable containers with an estimated fair
market value of $1,033,013 and (ii) beneficial assignment of an existing EFG
note payable to CLOU which had a principal balance of $369,852 at the date of
the transaction. The note had an effective interest rate of 8% and a quarterly
amortization schedule and matured on December 31, 1996. All amounts due from EFG
pursuant to this note had been received at December 31, 1996 in accordance with
the original amortization schedule. A portion of the consideration received was
used to satisfy the Partnership's accounts receivable balance of $184,178
outstanding from ICCU at November 30, 1994. The remaining three containers of
the original equipment group were disposed of in 1992 for stipulated payments as
a result of casualty events.

      In April 1995, the Partnership replaced the original containers with
comparable containers and leased such containers to a new lessee pursuant to the
rules for completing a like-kind exchange for income tax reporting purposes. The
carrying value of the new containers, $1,958,034, was reduced by $247,743,
representing the amount of gain deferred on the original containers. The
Partnership obtained approximately $925,000 of long-term financing in connection
with the replacement containers.

      All equipment was acquired from EFG, one of its Affiliates or third-party
sellers. The Partnership's Purchase Price is determined by the method described
in Note 2.

      All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At December 31, 1997, the Partnership was owed $367,376 by EFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
January 1998.

      Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC"), both Massachusetts limited partnerships formed in
1995 owned and controlled by certain principals of EFG, own 35,049 Units or
4.23% and 1,511 Units or 0.18% of the total outstanding units of the
Partnership, respectively. EFG owns a Class D interest in AALP and a 49% limited
partnership interest in ONC, both of which it acquired in December 1996.

NOTE 6 - NOTES PAYABLE

      Notes payable at December 31, 1997 consisted of installment notes of
$5,334,349 payable to banks and institutional lenders. The installment notes
bear interest rates ranging between 8.65% and 8.89%, except for one note which
bears a fluctuating interest rate based on LIBOR (5.72% at December 31, 1997)
plus a margin. All of the installment notes are non-recourse and are
collateralized by the equipment and assignment of the related lease payments.
Generally, the installment notes will be fully amortized by noncancellable
rents. However, the


                                     - 21 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

Partnership has balloon payment obligations at the expiration of the respective
primary lease terms related to the Finnair Aircraft and the Reno Aircraft of
$1,367,145 and $823,037, respectively. The carrying amount of notes payable
approximates fair value at December 31, 1997.

     The annual maturities of the installment notes payable are as follows:

<TABLE>
     <S>                                         <C>
     For the year ending December 31, 1998       $ 1,197,681
                                      1999         2,258,008
                                      2000           345,214
                                      2001           373,331
                                      2002         1,160,115
                                                   ---------

                                     Total       $ 5,334,349
                                                 ===========
</TABLE>

NOTE 7 - INCOME TAXES

      The Partnership is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Partnership. For financial statement purposes, the Partnership allocates net
income or loss to each class of partner according to their respective ownership
percentages (95% to the Limited Partners and 5% to the General Partner). This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended. For income tax purposes, the Partnership allocates net income or net
loss in accordance with the provisions of such agreement. The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account. At December 31, 1997, the General Partner had a positive tax
capital account balance.

      The following is a reconciliation between net income or loss reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                          1997                     1996                      1995
                                                   ------------------       ------------------        ------------------
<S>                                                <C>                      <C>                       <C>
Net income (loss)                                  $        1,143,233       $          820,414        $         (750,100)
     Financial statement depreciation in
       excess of (less than) tax depreciation              (2,025,107)                 187,262                 2,216,007
     Deferred rental income                                   (10,892)                  51,041                   (23,481)
     Other                                                   (891,689)                  88,232                   185,994
                                                   ------------------       ------------------        ------------------

Net income (loss) for federal income tax
     reporting purposes                            $       (1,784,455)      $        1,146,949        $        1,628,420
                                                   ==================       ==================        ==================
</TABLE>

      The principal component of "Other" consists of the difference between the
tax gain on equipment disposals and the financial statement gain (loss) on
disposals.


                                       22

<PAGE>

      The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                              1997                           1996
                                                                       ------------------             ------------------
<S>                                                                    <C>                            <C>
Partners' capital                                                      $        9,191,217             $        9,090,975

     Unrealized loss on investment securities                                     224,385                             --

     Add back selling commissions and organization
        and offering costs                                                      2,323,619                      2,323,619

     Financial statement distributions in excess of
        tax distributions                                                           8,186                         10,915

     Cumulative difference between federal income tax
        and financial statement income (loss)                                  (3,057,123)                      (129,435)
                                                                       ------------------             ------------------

Partners' capital for federal income tax reporting purposes            $        8,690,284             $       11,296,074
                                                                       ==================             ==================
</TABLE>

      Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.

NOTE 8 - LEGAL PROCEEDINGS

      On or about January 15, 1998, certain plaintiffs (the "Plaintiffs") filed
a class and derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the United States District Court
for the Southern District of Florida (the "Court") on behalf of a proposed class
of investors in 28 equipment leasing programs sponsored by EFG, including the
Partnership (collectively, the "Nominal Defendants"), against EFG and a number
of its affiliates, including the General Partner, as defendants (collectively,
the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit."

      The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.

      On March 9, 1998, counsel for the Defendants and the Plaintiffs entered
into a Memorandum of Understanding setting forth the terms pursuant to which a
settlement of the Class Action Lawsuit is intended to be achieved and which,
among other things, is expected to reduce the burdens and expenses attendant to
continuing litigation. The Memorandum of Understanding represents a preliminary
step towards a comprehensive Stipulation of Settlement between the parties that
must be presented to and approved by the Court as a condition precedent to
effecting a settlement. The Memorandum of Understanding (i) prescribes a number
of conditions necessary to achieving a settlement, including providing the
partners (or beneficiaries, as applicable) of the Nominal Defendants with the
opportunity to vote on any settlement and (ii) contemplates various changes
that, if effected, would alter the future operations of the Nominal Defendants.
With respect to the Partnership and 10 affiliated partnerships (hereafter
referred to as the "Exchange Partnerships"), the Memorandum of Understanding
provides for the restructuring of their respective business operations into a
single successor company whose securities would be listed and traded on a
national stock exchange. The partners of the Exchange Partnerships would receive
both common stock in the new company and a cash distribution in exchange for
their existing partnership interests. Such a transaction would, among other
things, allow for the consolidation of the Partnership's operating expenses with
other similarly-organized equipment leasing programs. To the extent that the
parties agree upon a Stipulation of Settlement that is approved by the Court,
the complete terms thereof will be communicated to all of the partners (or
beneficiaries) of the Nominal Defendants to enable them to vote thereon.


                                     - 23 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

      There can be no assurance that the parties will agree upon a Stipulation
of Settlement, or that it will be approved by the Court, or that the outcome of
the voting by the partners (or beneficiaries) of the Nominal Defendants,
including the Partnership, will result in a settlement finally being effected or
in the Partnership being included in any such settlement. The General Partner
and its affiliates, in consultation with counsel, concur that there is a
reasonable basis to believe that a Stipulation of Settlement will be agreed upon
by the parties and approved by the Court. In the absence of a Stipulation of
Settlement approved by the Court, the Defendants intend to defend vigorously
against the claims asserted in the Class Action Lawsuit. The General Partner and
its affiliates cannot predict with any degree of certainty the ultimate outcome
of such litigation.

      On July 27, 1995, EFG, on behalf of the Partnership and other
EFG-sponsored investment programs, filed an action in the Commonwealth of
Massachusetts Superior Court Department of the Trial Court in and for the County
of Suffolk, for damages and declaratory relief against a lessee of the
Partnership, National Steel Corporation ("National Steel"), under a certain
Master Lease Agreement ("MLA") for the lease of certain equipment. EFG is
seeking the reimbursement by National Steel of certain sales and/or use taxes
paid to the State of Illinois and other remedies provided by the MLA. On August
30, 1995, National Steel filed a Notice of Removal which removed the case to the
United States District Court, District of Massachusetts. On September 7, 1995,
National Steel filed its Answer to EFG's Complaint along with Affirmative
Defenses and Counterclaims, seeking declaratory relief and alleging breach of
contract, implied covenant of good faith and fair dealing and specific
performance. EFG filed its Answer to these counterclaims on September 29, 1995.
Though the parties have been discussing settlement with respect to this matter
for some time, to date, the negotiations have been unsuccessful. Notwithstanding
these discussions, EFG recently filed an Amended and Supplemental Complaint
alleging further default under the MLA and EFG recently filed a motion for
Summary Judgment on all claims and counterclaims. The Court held a hearing on
EFG's motion in December 1997 and the matter remains pending before the Court.
The Partnership has not experienced any material losses as a result of this
action.


                                     - 24 -
<PAGE>

                        ADDITIONAL FINANCIAL INFORMATION
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

         SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
                              OF EQUIPMENT DISPOSED

              for the years ended December 31, 1997, 1996 and 1995

      The Partnership classifies all rents from leasing equipment as lease
revenue. Upon expiration of the primary lease terms, equipment may be sold,
rented on a month-to-month basis or re-leased for a defined period under a new
or extended lease agreement. The proceeds generated from selling or re-leasing
the equipment, in addition to any month-to-month revenue, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition may not reflect the aggregate residual proceeds
realized by the Partnership for such equipment.

      The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1997, 1996 and 1995.

<TABLE>
<CAPTION>
                                                        1997                       1996                      1995
                                                 ------------------         ------------------        ------------------

<S>                                              <C>                        <C>                       <C>
Rents earned prior to disposal of
     equipment, net of interest charges          $        4,706,156         $        2,589,302        $        1,156,830

Sale proceeds realized upon disposition
     of equipment                                           876,740                    737,944                   253,473
                                                 ------------------         ------------------        ------------------

Total cash generated from rents
     and equipment sale proceeds                          5,582,896                  3,327,246                 1,410,303

Original acquisition cost of equipment
     disposed                                             4,942,148                  3,176,293                 1,167,922
                                                 ------------------         ------------------        ------------------

Excess of total cash generated to cost
     of equipment disposed                       $          640,748         $          150,953        $          242,381
                                                 ==================         ==================        ==================
</TABLE>


                                     - 25 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

            STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
                             SALES AND REFINANCINGS

                      for the year ended December 31, 1997

<TABLE>
<CAPTION>
                                                                                 Sales and
                                                     Operations                Refinancings                  Total
                                                 ------------------         ------------------        ------------------

<S>                                              <C>                        <C>                       <C>
Net income (loss)                                $          630,994         $          512,239        $        1,143,233

Add:
     Depreciation                                         2,284,020                         --                 2,284,020
     Management fees                                        165,486                         --                   165,486
     Book value of disposed equipment                            --                    306,741                   306,741
     Loss on exchange                                       739,326                         --                   739,326
     Proceeds on exchange                                        --                     57,760                    57,760
Less:
     Principal reduction of notes payable                (2,446,254)                        --                (2,446,254)
                                                 ------------------         ------------------        ------------------

     Cash from operations, sales and
     refinancings                                         1,373,572                    876,740                 2,250,312

Less:
     Management fees                                       (165,486)                                            (165,486)
                                                 ------------------         ------------------        ------------------

     Distributable cash from operations,
     sales and refinancings                               1,208,086                    876,740                 2,084,826

Other sources and uses of cash:
     Cash at beginning of year                            1,627,768                         --                 1,627,768
     Net change in receivables and
     accruals                                               117,627                         --                   117,627
     Dividend received                                       81,594                         --                    81,594

Less:
     Cash distributions paid                                     --                   (873,180)                 (873,180)
                                                 ------------------         ------------------        ------------------

Cash at end of year                              $        3,035,075         $            3,560        $        3,038,635
                                                 ==================         ==================        ==================
</TABLE>


                                     - 26 -
<PAGE>

                            AMERICAN INCOME FUND I-D,
                       a Massachusetts Limited Partnership

                       SCHEDULE OF COSTS REIMBURSED TO THE
                 GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
                   BY SECTION 9.4 OF THE AMENDED AND RESTATED
                AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP

      For the year ended December 31, 1997, the Partnership reimbursed the
General Partner and its Affiliates for the following costs:

      Operating expenses                     $ 215,318


                                     - 27 -